Moody’s Investors Service raised the underlying rating on Chandler, Ariz., water and sewer revenue bonds to Aa2 from Aa3. The upgrade affects $80.9 million of outstanding senior-lien net utility revenue debt.
The upgrade reflects several factors, including a shift in the city’s rate-setting practice, with a renewed commitment to reviewing and raising rates as necessary, a strong balance sheet with solid cash reserves, and sound coverage of senior-lien debt by pledged revenues. Sound coverage of senior-lien debt is expected to be preserved and then grow given that future bonding is expected to be secured by the city’s general obligation or excise tax pledge.
Despite sizeable capital needs, the utility also maintains sufficient capacity to accommodate future borrowing plans. The size and high-quality service area as represented by Chandler’s Aa1 GO rating was also incorporated, Moody’s said.
